The United States and the European Union have filed separate complaints at the World Trade Organization, each accusing the other of unfair subsidies in the aerospace industry. The dispute concerns two giants in aircraft manufacturing: Europe's Airbus consortium and America's Boeing Corporation.
The United States struck the first blow in the trans-Atlantic trade squabble. U.S. Trade Representative Robert Zoellick accused the EU of attempting to preserve and expand subsidies to Airbus under the guise of nurturing an "infant" industry.
USTR spokesperson Meena Moorjani says Airbus, which was created more than three decades ago, is hardly in need of such nurturing.
"Airbus now sells more large civil aircraft than Boeing," she said. "{The EU and Airbus appear to want to buy more time for more subsidies for more planes. That is not fair, and it violates international trade rules."
But the European Union fought back - quickly. Within hours of the U.S. complaint, the EU filed a counterclaim with the World Trade Organization, accusing the United States of hypocrisy. In a statement, EU Trade Commissioner Pascal Lamy said he accepts the American challenge and that "it is high time to put an end to massive illegal U.S. subsidies to Boeing which damage Airbus."
The EU says Boeing gets government assistance in the form of multi-billion dollar defense contracts, direct export subsidies and tax breaks for the development of aircraft, such as the 7E7, which Boeing unveiled last year.
U.S. trade officials say the counter-complaint was expected, and that a 1992 accord between the two sides that governed aerospace subsidies has outlived its usefulness. They say the goal is fair competition and a level playing field. Boeing says it fully backs the U.S. action.
Under WTO rules, the two sides now have 60 days to try to reach an agreement before an independent panel is created to examine the dispute.
Both sides believe that the outcome of the dispute will help determine which of the two giant plane-makers will dominate the market in years to come.